PUBLIC SECTOR KNOWLEDGE BRIEF

DISASTER ACCOUNTABILITY Complex regulations are a challenge for compliance

Table of Contents

Introduction ................................................................................................................................................... 2

Accountability is important in response and recovery efforts ......................................................... 2

FEMA overview ............................................................................................................................................. 3

Response and recovery are distinct; recovery can last for years ................................................... 3

Three main areas for expenditures ..................................................................................................... 3

Accountability’s complexities ...................................................................................................................... 5

Grantees, applicants, subrecipients, and vendors have oversight roles ........................................ 5

Several areas flagged by auditors ...................................................................................................... 5

Be proactive to fully understand regulations .................................................................................... 6

Procurement oversight ................................................................................................................................. 7

Organizations need to closely follow federal regulations ................................................................ 7

Period of performance – Sec. 200.309 ................................................................................................ 8

General procurement standards – Sec. 200.318 ................................................................................ 8

Conflicts of interest – Sec. 200.318(c) ................................................................................................ 9

Competition – Sec. 200.319 ................................................................................................................. 9

Sole source – Sec. 200.320(f) .............................................................................................................. 9

Contracting with small businesses – Sec. 200.321 ........................................................................... 9

Contract cost and price – Sec. 200.323 .............................................................................................. 9

Allowability – Sec. 200.403 ................................................................................................................ 10

Prior written approval – Sec. 200.407 ............................................................................................... 10

Conclusion .................................................................................................................................................. 11

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About the Experts

Mara Ash, CIA, CGAP, CGFM, CMRA

Mara Ash serves as the chief executive officer of Business & Financial Management Solutions LLC,

a client-focused management-consulting firm in Austin, Texas. She has more than 25 years of

financial management and audit experience in the government sector. Ash is a federal compliance

expert, with in-depth experience helping state and local agencies build federal compliance

programs and processes. Her career includes finance and consulting positions serving government

agencies at all levels of government – federal, state and local, as well as nonprofit organizations.

Paul Morris, CPA

Paul Morris serves as the Director for FEMA’s Region 6 Texas Recovery Office, focused on efforts

related to Hurricane Harvey. In addition to his experience with disaster response and recovery,

Morris has served as an audit and executive leadership professional with more than 25 years of

experience in healthcare, higher education, cancer research, regulatory functions, and state

agencies. His experience includes leading the internal audit division and later serving as assistant

commissioner for a large health and human services agency; providing technical assistance and

guiding turnaround and improvement projects for struggling, high-visibility organizations; and

providing leadership for large-scale disaster responses.

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INTRODUCTION

Accountability is important in response and recovery efforts

A major natural disaster such as a hurricane affects a wide area and thousands of people and generates

a massive response from government agencies and private organizations. News reports and social media

videos often show gripping imagery from response efforts such as people being rescued from their homes

and relief supplies being distributed. While the response to a disaster leaves the largest impression, it is only

a portion of the story. Recovery from a disaster is less dramatic and longer term compared to the response,

and unlike the response, it can take years.

Regardless, accountability is vital in both response and recovery situations to ensure that federal assistance

is awarded in compliance with regulations, and work is performed with the terms and conditions of such

assistance. Federal regulations governing relief and recovery activities are complex and constantly changing,

which can be daunting for an organization to navigate. Complicating these efforts, each disaster has its own

unique characteristics. Programs that worked in a previous situation might not work for the next situation, or

the programs might have revised guidelines that need to be taken into account.

These factors give internal auditors an important role in providing assurance and compliance to management

regarding federal disaster relief and recovery regulations.

In this knowledge brief, Paul Morris, CPA, director, Federal Emergency Management Agency (FEMA); and

Mara Ash, CIA, CGAP, CGFM, CMRA, chief executive officer of Business & Financial Management Solutions,

LLC, and a federal compliance expert, discuss accountability considerations and procurement requirements

related to disaster relief and recovery.

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FEMA OVERVIEW

Response and recovery are distinct; recovery can last for years

The Federal Emergency Management Agency (FEMA) coordinates the federal government's role in

preparing for, preventing, mitigating, responding to, and recovering from domestic disasters. A state or territory

has to request FEMA’s help, whether for technical assistance before a disaster or for federal assistance

thereafter.

Response and recovery are two distinct phases in a disaster emergency. In addition, a situation can be

considered either an emergency or exigency in terms of eligibility for disaster funding. FEMA defines an

emergency as an unexpected and dangerous situation that could cause harm or injury and needs immediate

action. The rescuing of people from their homes during flooding would be an example of an emergency. On

the other hand, an exigency involves a threat to public health or safety that can last for weeks or months after

a disaster, such as the repair of a bridge damaged in a storm.

Complicating oversight efforts, recovery can continue for years as projects are completed. For example, FEMA

is still doing project closeouts for recovery efforts linked to Hurricane Katrina, which devastated New Orleans

and the Mississippi Gulf coast in August 2005, said Morris.

Three main areas for expenditures

FEMA’s expenditures are in three main areas: individual assistance, hazard mitigation, and public assistance.

Individual assistance provides help for survivors through housing assistance and other support through grants

such as a temporary place to live, or home repairs. Hazard mitigation can deal with projects to prevent or

mitigate damages from natural disasters such as fires, flooding, or hurricanes. Public assistance supports

state and local governments and non-profit organizations such as schools and public utility districts’ recovery

efforts for projects like infrastructure repairs, emergency protective measures, and debris removal.

Although federal assistance varies from disaster to disaster, applicants can get a 75% reimbursement for

eligible recovery costs for expenditures such as repair and replacement, cleanup, and overtime. Projects can

include roads, water treatment facilities, public buildings, and other types of infrastructure.

Disaster public assistance has two general project categories. The first is emergency work, which includes

debris removal and emergency protective measures such as the shoring of a bridge to ensure it is safe for

traffic. The second is permanent work such as the restoration of roads and bridges, water control facilities,

buildings and equipment, utilities, and parks and other recreational facilities. Understanding the distinction

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between the two is important in the procurement process, because the requirements are different between

the two, especially if the organization is in a disaster-prone area, Ash said.

Funding for projects can pass from FEMA through a grantor, such as the state of Texas for Hurricane Harvey

recovery, to subrecipients such as municipalities, school districts, and other organizations or the funding can

be awarded directly to an organization.

Subrecipients have to follow the same procurement requirements as the prime recipient (i.e. pass-through

grantee), so it is very important to understand those requirements, even if the subrecipient is well down the

funding list, Ash said. In addition, the pass-through recipient for these funds — such as the state of Texas in

the case of Harvey — is required to monitor the activities of subrecipients.

Given the number of programs and potential agencies that can be involved in a recovery effort,

accountability can become an issue if the proper controls are not in place, Morris said.

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